35948726-business-ethics-concepts.docx

8/17/2019 35948726-Business-Ethics-Concepts.docx

1/25

Business Ethics, Anderson University DBA Fall 2001

Business Ethics Concepts & Cases

MANUEL G. VELASQUEZ

ABSTRACT

Summary of the main points of the rst to chapters in the !oo"# $heremainin% chapters are application of the concepts summari&ed as relatin%

to political forms of %overnment and mar"et systems# $hese further chapters are less relevant to the DBA class that this summary as prepared

for#

Chapter 1 – Ethics & Business

Ethics is the principles ofconduct governing an individualor a group. It is the study ofmorality.

Morality are the standards thatan individual or group has aboutwhat is right and wrong, or

good and evil.

Moral norms can usually beexpressed as general rules orstatements, such as “Always tellthe truth”. Moral values canusually be expressed asstatements describing objects orfeatures of objects that haveworth, such as “Honesty isgood” and “Injustice is bad”.

ive characteristics can help pindown the nature of moralstandards.

!. "oral standards deal withmatters that we thin# can

seriously injure or seriouslybene$t human beings.

%. "oral standards are notestablished or changed bythe decisions of particularlegislative bodies.

&. 'e feel that moral standardsshould be preferred to other

values including (especially)*self+interest.

. "oral standards are based onimpartial considerations. -that is, a point of view thatdoes not evaluate standardsaccording to whether theyadvance the interests of aparticular individual orgroup, but one that goesbeyond personal interests toa “universal” standpoint in

which everyones interestsare impartially counted ase/ual.

0. "oral standards areassociated with specialemotions and a special

vocabulary.

© 2001!y 'arl (# 'napp 1age ! of %0 0)12*2001


2/25


Ethics is the discipline thatexamines ones moral standardsor the moral standards of a

society. Ethics is the study ofmoral standards - the processof examining the moralstandards of a person or societyto determine whether thesestandards are reasonable orunreasonable in order to applythem to concrete situations andissues. 2he ultimate aim ofethics is to develop a body of

moral standards that we feel arereasonable to hold - standardsthat we have thought aboutcarefully and have decided are

justi$ed standards for us toaccept and apply to the choicesthat $ll our lives.

Although ethics is a normativestudy of ethics, the social

sciences engage in a descriptivestudy of ethics. A normativestudy aims to discover whatshould be. A descriptive study attempts to describe or explainthe world without reaching anyconclusions about whether theworld is as it should be.

1.1 The Nature of Business Ethics

Business ethics concentrateson the moral standards as theyapply to business policies,institutions, and behavior.3usiness ethics, in other words,is a form of applied ethics. Itincludes not only the analysis of

moral norms and moral values,but also attempts to apply theconclusions of this analysis tothat assortment of institutions,technologies, transactions,

activities, and pursuits that wecall business.

3usiness ethics investigatesthree di4erent #inds of issues5systemic, corporate, andindividual. Systemic issues inbusiness ethics are ethical/uestions raised about theeconomic, political, legal, and

other social systems withinwhich businesses operate.Corporate issues in businessethics are ethical /uestionsraised about a particularcompany. Individual issues inbusiness ethics are ethical/uestions raised about aparticular individual orparticular individuals within a

company.

3ecause corporate acts

originate in the choices and

actions of human individuals, it

is these individuals who must be

seen as the primary bearers of

moral duties and moral

responsibility. 6onetheless, it

ma#es perfectly good sense tosay that a corporate

organi7ation has moral duties

and that it is morally

responsible for its acts.

© 2001!y 'arl (# 'napp 1age % of %0 0)12*2001


3/25


2he fact that multinationalsoperate in more than onecountry produces ethicaldilemmas for their managersthat managers of $rms limited

to a single country do not face.

• 2he ability to shift itsoperations between countriesenables the multinational toescape the social controlsthat a single nation mightattempt to impose on themultinational and can allowthe multinational to play one

country against another.• It can sometimes transfer

raw materials, goods andcapital among its plants indi4erent countries at termsthat enable it to escape taxesand $scal obligations thatcompanies limited to a singlenation must bear.

• 2hey often have the

opportunity to transfer a newtechnology or set of productsfrom a more developedcountry into nations that areless developed.

• It is often faced with the/uandary of deciding whichof these di4erent norms andstandards to implement in itsmany operations.

Ethical relativism is the viewthat there are no ethicalstandards that are absolutelytrue and that apply or should beapplied to the companies and

people of all societies. 2hus, thetheory of ethical relativismimplies that whatever themajority in our society believesabout morality is automatically

correct. 2he fundamentalproblem with ethical relativismis that it holds that the moralstandards of a society are theonly criteria by which actions inthat society can be judged.

Almost all ethical issues raisedby new technologies are relatedin one way or another to

/uestions of ris#. "any of theethical issues new technologieshave created - especiallyinformation technologies - arerelated to privacy. Informationtechnologies have also raiseddi4icult ethical issues about thenature of the right to propertywhen the property in /uestion isinformation. inally,

biotechnology has created yetanother host of troubling ethicalissues.

1.2 Moral Development & Moral

Reasoning

As people mature, they changetheir values in very deep andprofound ways. 2he ability toma#e reasoned moral

judgments develops inidenti$able stages (8ohlberg*.

© 2001!y 'arl (# 'napp 1age & of %0 0)12*2001


4/25


A# +reconventional Sta%es At these $rst two stages, the childis able to respond to rules andsocial expectations and can applythe labels of good, bad, right andwrong. 2hese rules, however, are

seen as something externallyimposed on the self.!. +unishment and !edience

rientation - At this stage,the physical conse/uencesof an act wholly determinethe goodness and badnessof that act.

%. -nstrument and (elativity rientation - At this stage,right actions become thosethat can serve asinstruments for satisfyingthe childs needs of theneeds of those for whomthe child cares.

B# .onventional Sta%es"aintaining the expectations of ones own family, peer group, ornation is now seen as valuable inits own right, regardless of theconse/uences.!. Interpersonal 9oncordance

:rientation - ;ood behaviorat this early conventionalstage is living to theexpectations of those forwhom one feel loyalty,a4ection, and trust, such asfamily and friends.

%. /a and rder rientation- niversal ?thical 1rinciples:rientation - At this $nalstage, right action comes tobe de$ned in terms of moral principles chosenbecause of their logicalcomprehensiveness,universality andconsistency.

Although people generally

progress through the stages in

the same se/uence, not

everyone progresses through all

the stages. 8ohlberg has been

critici7ed for claiming that the

higher stages are morally

preferable to the lower stages.

It fails to ade/uately trace out

the pattern of development of

women. emales, ;illigan

claimed, tend to see themselves

as part of a “web” of

relationships. or women,

morality is primarily a matter of

“caring” and “beingresponsible” for others with

whom one is involved in

personal relationships, and not

a matter of adhering to

impartial and impersonal rules.

© 2001!y 'arl (# 'napp 1age of %0 0)12*2001


5/25


"oral development for women

is mar#ed by progress toward

more ade/uate ways of caring

and being responsible for

oneself and for others. 2his iscalled the care perspective.

Moral reasoning refers to the

reasoning process by which

human behaviors, institutions,

or policies are judged to be in

accordance with or in violation

of moral standards. "oral

reasoning always involves two

essential components5

! An understanding of whatreasonable moral standardsre/uire, prohibit, value, orcondemn@ and

% ?vidence or information thatshows that a particularperson, policy, institution, orbehavior has the #inds of features that these moralstandards re/uire, prohibit,

value, or condemn.

irst and primarily, moral

reasoning must be logical. All

the unspo#en moral and factual

assumptions must be madeexplicit, and both assumptions

and premises be displayed and

subject to criticism. econd, the

factual evidence cited in

support of a persons judgment

must be accurate, relevant, and

complete. 2hird, the moral

standards involved in a persons

moral reasoning must be

consistent. 2he consistencyre/uirement is the basis of an

important method of showing

that a given moral standard

must be modi$ed or rejected5

the use of counter examples or

hypotheticals.

1.3 Arguments For and Against

Business Ethics

1ersons involved in business,

they claim, should single

mindedly pursue the $nancial

interests of their $rm and not

sidetrac# their energies or their

$rms resources into “going

good wor#s”. irst, some have

argued that in perfectlycompetitive free mar#ets, the

pursuit of prot ill !y itself

ensure that the mem!ers of

society are served in the most

socially !enecial ays. irst,

most industrial mar#ets are not

“perfectly competitive”. econd,

the argument assumes that any

steps ta#en to increase pro$ts

will necessarily be socially

bene$cial. 2hird, the argument

assumes that, by producing

whatever the buying public

© 2001!y 'arl (# 'napp 1age 0 of %0 0)12*2001


6/25


wants (or values*, $rms are

producing what all the members

of society want, when in fact the

wants of large segments of

society (the poor anddisadvantaged* are not

necessarily met because they

cannot fully participate in the

mar#etplace. ourth, the

argument is essentially ma#ing

a normative judgment on the

basis of some assumed but

unproved moral standards.

A loyal a%ent of his or her

employer, the manager has a

duty to serve his or her

employer in whatever ways will

advance the employers self+

interests. 2he loyal agent

argument relies on several

/uestionable assumptions. irst,the argument tries to show,

again, that ethics does not

matter by assuming an

unproved moral standard.

econd, the loyal agent

argument assumes that there

are no limits to the managers

duties to serve the employer,

when in fact, such limits are an

express part of the legal and

social institutions from which

these duties arise. 2he law of

agency states that, “in

determining whether or not the

orders of the client to the agent

are reasonable B business or

professional ethics are to be

considered,” and “in no event

would it be implied that anagent has a duty to perform acts

which are illegal or unethical.”

2hird, the loyal agent argument

assumes that if a manager

agrees to serve a $rm, then this

agreement automatically

justi$es whatever the manager

does on behalf of the $rm.

A third #ind of objection is

sometimes made against

bringing ethics into business.

2his is the objection that to be

ethical it is enough for business

people merely to obey the law5

3usiness ethics is essentially

obeying the law. It is wrong,however, to see law and ethics

as identical. "oreover, most

ethicists agree that all citi7ens

have a moral obligation to obey

the law so long as the law does

not re/uire clearly unjust

behavior. 2his means that, in

most cases, it is immoral to

brea# the law.

:ne way to argue that ethics

should be brought into business

is simply by pointing out that,

because ethics should govern all

© 2001!y 'arl (# 'napp 1age C of %0 0)12*2001


7/25


voluntary human activities and

because business is a voluntary

human activity, ethics should

also govern business.

3usiness activities, li#e any

other human activities, cannot

exist unless the people involved

in the business and its

surrounding community adhere

to some minimal standards of

ethics.

?thical considerations areconsistent with business

pursuits, in particular the

pursuit of pro$t (results have

been mixed, but no studies have

found a negative correlation*.

A prisoner’s dilemma is a

situation in which two parties

are each faced with a choicebetween two options5 ?ither

cooperate with the other party

or do not cooperate. rom the

joint standpoint of the parties

involved, the best outcome in a

prisoners dilemma is for both

parties to cooperate in their

agreement. In short, whenpeople must choose between

cooperating or not cooperating

in rules or agreements, and

when each has more to gain by

not cooperating, then rational

self+interest suggests that

people should not cooperate in

#eeping the rules or

agreements. 2he prisoners

dilemma, then, seems to showthat the rational self+interested

person should be unethical in

business when there is

something to be gained through

unethical behavior. However,

this conclusion is based on a

false assumption. 'e have

assumed so far that prisoners

dilemma situations are isolated

interactions between people

who never interact again. 2his

threat of future retaliation

ma#es it more rational for the

parties in a series of repeated

exchanges to cooperate than to

try to ta#e advantage of each

other. 2he most importantlesson of the prisoners

dilemma, then, is that when

people deal with each other

repeatedly, so that each can

later retaliate against or reward

the other party, cooperation is

more advantageous than

continuously trying to ta#eadvantage of the other party.

3usiness interactions with

employees, customers,

suppliers, and creditors are

repetitive and ongoing. 2he

© 2001!y 'arl (# 'napp 1age D of %0 0)12*2001


8/25


prisoners dilemma argument,

then, implies that, over the long

run and for the most part, it is

better to be ethical in business

than to be unethical.

inally, we should note that

there is also a good deal of

evidence that most people so

value ethical behavior that they

will punish those whom they

perceive to be behaving

unethically and reward those

who are perceived to be ethical.

1.4 Moral Responsibility & Blame

"oral reasoning, however, is

sometimes directed at a related

but di4erent #ind of judgment5

determining whether a person is

morally responsible, or

culpable, for having donesomething wrong or for having

wrongfully injured someone.

2he term moral responsibility is

sometimes used as an

e/uivalent to moral duty or

moral obligation.

A person is morally

responsible only for those actsand their forseen injurious

e4ects (a* which the person

#nowingly and freely performed

or brought about and which it

was morally wrong for the

person to perform or bring

about, or (b* which the person

#nowingly and freely failed to

perform or prevent and which it

was morally wrong for theperson to fail to perform or

prevent.

2wo conditions completely

eliminate a person’s moral

responsibility for causing a

wrongful injury5 (!* ignorance

and (%* inability . 2here are also

several mitigating factors that

can lessen a persons moral

responsibility depending on the

severity of the wrong.

"itigating factors include (a*

circumstances that leave a

person uncertain but not

altogether unsure about what

he or she is doing (these a4ectthe persons #nowledge*@ (b*

circumstances that ma#e it

di4icult but not impossible for

the person to avoid doing it

(these a4ect the persons

freedom*@ (c* circumstances

that minimi7e but not

completely remove a persons

involvement in an act (these

a4ect the degree to which the

person actually caused or

helped to cause the wrongful

injury*. 2hese can lessen a

persons responsibility for

© 2001!y 'arl (# 'napp 1age E of %0 0)12*2001


9/25


wrongdoing depending on a

fourth factor5 the seriousness of

the wrong.

'ho is morally responsible for jointly produced acts) 2he

traditional view is that those

who #nowingly and freely did

what was necessary to produce

the corporate act are each

morally responsible.

9ritics of the traditional view of

the individuals responsibilityfor corporate acts have claimed

that the corporate group and

not the individuals who ma#e up

the group must be held

responsible for the act. 2he law

typically attributes the acts of a

corporations managers to the

corporate (so long as the

managers act within their

authority* and not to the

managers as individuals.

3ecause individuals are morally

responsible for the #nown and

intended conse/uences of their

free actions, any individual who

#nowingly and freely joins his

actions together with those ofothers, intending thereby to

bring about a certain corporate

act, will be morally responsible

for that act. 2he excusing

factors of ignorance and

inability, which are endemic to

large+scale bureaucratic

corporate organi7ations, will

completely eliminate a persons

moral responsibility. "oreover,depending on the seriousness of

the act, the mitigating factors of

uncertainty, di4iculty, and

minimal involvement can also

diminish a persons moral

responsibility for a corporate

act.

It is clearly mista#en, however,

to thin# that an employee who

freely and #nowingly does

something wrong is absolved of

all responsibility when he or she

is “following orders”.

© 2001!y 'arl (# 'napp 1age F of %0 0)12*2001


10/25


Chapter 2 – Ethical Principles in

Business

Gudgments about justice are

based on moral principles thatidentify fair ways of distributing

bene$ts and burdens among the

members of a society.

Gudgments about violations of

peoples rights are based on

moral principles that indicate

the areas on which peoples

rights to freedom and well+being must be respected.

A utilitarian standard of

morality @ a moral principle,

that is, that claims that

something is right to the extent

that it diminishes social costs

and increases social bene$ts. An

ethic of care is an ethic thatemphasi7es caring for the

concrete well+being of those

near to us. ?valuations of the

moral character of persons or

groups are based on what is

called an ethic of virtue.

2.1 Utilitarianism: Weighing Social

Costs and Benefits

electing the course of action

that would have the most

bene$cial conse/uences is

sometimes referred to as a

consequentialist approach and

sometimes as a utilitarian

approach.

Utilitarianism is a general

term for any view that holds

that actions and policies should

be evaluated on the basis of the

bene$ts and costs they will

impose on society. "any

business analysts hold that the

best way to evaluate the ethical

propriety of a business decision

- or any other decision - is byrelying on utilitarian

costbene$t analysis.

Geremy 3entham (!DE+!E&%* is

generally considered the

founder of traditional

utilitarianism. 2he utilitarian

principle holds that5 “An action

is right from an ethical point of view if and only if the sum total

of utilities produced by that act

is greater than the sum total of

utilities produced by any other

act the agent could have

performed in its place.”

2he utilitarian principle

assumes that we can somehow

measure and add the /uantities

of bene$ts produced by an

action and subtract from them

the measured /uantities of

harm the action will have. 3oth

© 2001!y 'arl (# 'napp 1age ! of %0 0)12*2001


11/25


the immediate and all

foreseeable future costs and

bene$ts that each alternative

will provide for each individual

must be ta#en into account aswell as any signi$cant indirect

e4ects.

2hree steps are performed5

! Jetermine what alternativeactions or policies areavailable to me on thatoccasion.

% or each alternative action,estimate the direct andindirect bene$ts and coststhat the action wouldproduce for each and everyperson a4ected by the actionin the foreseeable future.

& 2he alternative that producesthe greatest sum total of utility must be chosen as the

ethically appropriate courseof action.

>tilitarian views have been

highly in=uential in economics

and is the basis of the

techni/ues of economic cost+

bene$t analysis.

Problems with

Utilitarianism

! Ji4iculties encounteredmeasuring.

% ome bene$ts and costsseem intractable tomeasurement (health*.

& 3ecause many of the bene$tsand costs of an action cannot

easily be predicted, they alsocannot be ade/uatelymeasured.

It is unclear exactly what isto count as a bene$t andwhat is to count as a cost.

0 2he assumption that allgoods are measurable impliesthat all goods can be tradedfor e/uivalents of each other.

Replies to the Problems of

Utilitarianism

• >tilitarianism merely insiststhat the conse/uences of anyprojected act be expresslystated with as much clarityand accuracy as is humanlypossible, and that all relevantinformation concerning theseconse/uences be presentedin a form that will allow themto be systematicallycompared and impartiallyweighed against each other.?xpressing this informationin /uantitative termsfacilitates such comparisons

and weightings. However,where /uantitative data areunavailable, one mylegitimately rely on sharedand common sense

judgments of the comparative

© 2001!y 'arl (# 'napp 1age !! of %0 0)12*2001


12/25


values things have for mostpeople.

• everal common+sensecriteria can be used todetermine the relative values

that should be given to various categories of goods. Instrumental goods arethings that are considered

valuable only because theylead to other good things.

Intrinsic goods, however,are things that are desirableindependent of any otherbene$ts they may produce.

• Kou can weigh goodsbetween needs and wants.

• A standard objection againstusing monetary values tomeasure all costs andbene$ts is that some goods,in particular health and life,cannot be priced. 2heutilitarian may argue,however, that not only is itpossible to put a price onhealth and life, but that wedo so almost daily (ex. thecost of safety e/uipment in acar*.

Rights and Justice –

Problems with Utilitarianism

2he major di4iculty with

utilitarianism, according to

some critics, is that it is unable

to deal with two #inds of moral

issues5 those relating to rights

and those relating to justice.

2hat is, the utilitarian principle

implies that certain actions are

morally right when in fact they

are unjust or violate peoples

rights. It can also go wrong,when it is applied to situations

that involve social justice.

Replies to the Problems with

Rights and Justice

>tilitarians have proposed an

important and in=uential

alternative version ofutilitarianism call rule

utilitarianism. 2he basic

strategy of the rule+utilitarian is

to limit utilitarian analysis to

the evaluations of moral rules.

According to the rule+utilitarian,

whey trying to determine

whether a particular action is

ethical, one is never supposed

to as# whether that particular

action will produce the greatest

amount of utility. Instead, one is

supposed to as# whether the

action is re/uired by the correct

moral rules that everyone

should follow. If the action is

re/uired by such rules, then oneshould carry out the action. 3ut

what are the “correct” moral

rules) It is only this second

/uestion, according to the rule+

utilitarian, that is supposed to

© 2001!y 'arl (# 'napp 1age !% of %0 0)12*2001


13/25


be answered by reference to

maximi7ing utility. 2he correct

moral rules are those that would

produce the greatest amount of

utility if everyone were to followthem.

! An action is right from anethical point of view if andonly if the action would bere/uired by those moral rulesthat are correct.

% A moral rule is correct if andonly if the sum total of

utilities produced if everyonewere to follow that rule isgreater than the sum totalutilities produced if everyonewere to follow somealternative rule.

2here are two main limits to

utilitarian methods of moral

reasoning, therefore, although

the precise extent of these

limits is controversial. irst,utilitarian methods are di4icult

to use when dealing with values

that are di4icult and perhaps

impossible to measure

/uantitatively. econd,

utilitarianism by itself seems to

deal inade/uately with

situations that involve rights

and justice, although some have

tried to remedy this de$ciency

by restricting utilitarianism to

the evaluation of rules.

2.2 Rights and Duties

In general, a right is an

individuals entitlement to

something. If it derives from alegal system, it is a legal right.

Legal rights are limited to the

particular jurisdiction within

which the legal system is in

force. Moral rights or human

rights are based on moral

norms and principles that

specify that all human beingsare permitted or empowered to

do something or are entitled to

have something done for them.

'ays that we use the term a

right5

© 2001!y 'arl (# 'napp 1age !& of %0 0)12*2001


14/25


• 2o indicate the mere absenceof prohibitions againstpursuing some interest oractivity.

• 2o indicate that a person isauthori7ed or empowered todo something either to securethe interests of others or tosecure ones interests.

• 2o indicate the existence of prohibitions or re/uirementson others that enable theindividual to pursue certaininterests or activities.

2he most important moral rights

are rights that impose

prohibitions or re/uirements on

others and that thereby enable

individuals to choose freely

whether to pursue certain

interests or activities.

'ays that we use the term

moral rights5

• 2ightly correlated withduties. 2his is because onepersons moral rightgenerally can be de$ned - atleast partially - in terms of the moral duties other people

have toward that person.• 1rovide individuals with

autonomy and e/uality in thefree pursuit of their interests.

• 1rovide a basis for justifyingones actions and for

invo#ing the protection or aidof others.

3ecause moral rights have these

features, they provide bases for

ma#ing moral judgments that

di4er substantially from

utilitarian standards. irst,

moral rights express the

re/uirements of morality from

the point of view of the

individual, whereas

utilitarianism expresses there/uirements of morality from

the point of view of society as a

whole. econd, rights limit the

validity of appeals to social

bene$ts and to numbers.

A large group of rights called

negative rights is

distinguished by the fact that itsmembers can be de$ned wholly

in terms of the duties others

have to not interfere in certain

activities of the person who

holds a given right.

In contrast, positive rights do

more than impose negative

duties. 2hey also imply that

some other agents (it is not

always clear who* have the

positive duty of providing the

holder of the right with

whatever he or she needs to

© 2001!y 'arl (# 'napp 1age ! of %0 0)12*2001


15/25


freely pursue his or her

interests.

Contractual rights and

duties (sometimes calledspecial rights and duties or

special obligations* are the

limited rights and correlative

duties that arise when one

person enters an agreement

with another person.

9ontractual rights and duties

are distinguished5

• 3y the fact that they attach tospeci!c individuals and thecorrelative duties areimposed only on otherspeci$c individuals.

• Arise out of a speci$ctransaction betweenparticular individuals.

• Jepend on a publiclyaccepted system of rules thatde$ne the transactions thatgive rise to those rights andduties.

2he ethical rules that govern

contracts5

•

3oth of the parties to acontract must have full#nowledge of the nature of the agreement they areentering.

• 6either party to a contractmust intentionally

misrepresent the facts of thecontractual situation to theother party.

• 6either party to the contractmust be forced to enter the

contract under duress orcoercion.

• 2he contract must not bindthe parties to an immoral act.

8ants theory is based on a

moral principle that he calls the

categorical imperative and that

re/uires that everyone shouldbe treated as a free person

e/ual to everyone else. 8ants

$rst formulation of the

categorical imperative is as

follows5 “I ought never to act

except in such a way that I can

also will that my maxim should

become a universal law.” An

action is morally right for a

person in a certain situation if,

and only if, the persons reason

for carrying out the action is a

reason that he or she would be

willing to have every person act

on, in any similar situation. 2he

$rst formalation of the

categorical imperative, then,incorporates two criteria for

determining moral right and

wrong5

© 2001!y 'arl (# 'napp 1age !0 of %0 0)12*2001


16/25


• >niversali7ability5 2hepersons reasons for actingmust be reasons thateveryone could act on at leastin principle.

•


17/25


claims that the only basic right

that every individual possesses

is the negative right to be free

from the coercion of other

human beings. 6o7ic# and otherlibertarians pass too /uic#ly

over the fact that the freedom of

one person necessarily imposes

constraints on other persons.

Justice and Fairness

Issues involving /uestions of

justice and fairness are usuallydivided into three categories5

• "istributive justice, the$rst and basic category, isconcerned with the fairdistribution of societysbene$ts and burdens.

• #etributive justice refers tothe just imposition of

punishments and penalties onthose who do wrong.

• Compensatory justiceconcerns the best way of compensating people forwhat they lost when theywere wronged by others.

$he principle of distributive

justice5 Individuals who are

similar in all respects relevant

to the #ind of treatment in

/uestion should be given similar

bene$ts and burdens, even if

they are dissimilar in other

irrelevant respects@ and

individuals who are dissimilar in

a relevant respect ought to be

treated dissimilarly, in

proportion to their dissimilarity.It is based on the purely logical

idea that we must be consistent

in the way we treat similar

situations.

Justice as Equality:

Egalitarianism

Egalitarians hold that thereare no relevant di4erences

among people that can justify

une/ual treatment. ?very

person should be given exactly

e/ual shares of a societys or a

groups bene$ts and burdens.

Criticisms of Egalitarians:

• 2here is no /uality that allhuman beings possess inprecisely the same degree.

• 2he egalitarian ignores somecharacteristics that should beta#en into account indistributing goods both insociety and in smallergroups5 need, ability and

e4ort.

ome egalitarians have tried to

strengthen their position by

distinguishing two di4erent

© 2001!y 'arl (# 'napp 1age !D of %0 0)12*2001


18/25


#inds of e/uality5 political

e/uality and economic e/uality.

1olitical e/uality refers to an

e/ual participation in, and

treatment by, the means ofcontrolling and directing the

political system. 2his includes

e/ual rights to participate in the

legislative process, e/ual civil

liberties, and e/ual rights to

due process. ?conomic e/uality

refers to e/uality of income and

wealth and e/uality of

opportunity.

2hus, they have argued that

every person has a right to a

minimum standard of living and

that income and wealth should

be distributed e/ually until this

standard is achieved for

everyone. 2he economic surplusthat remains after everyone has

achieved the minimum standard

of living can then be distributed

une/ually according to need,

e4ort and so on.

Justice ased on

Contribution: Capitalist

Justice

E%ort5 3ene$ts should be

distributed according to the

value of the contribution the

individual ma#es to a society, a

tas#, a group, or an exchange.

2he main /uestion raised by the

contributive principle of

distributive justice is how the

“value of the contribution” ofeach individual is to be

measured (based on &or'

e%ort*. 2o reward a persons

e4orts without any reference to

whether the person produces

anything worthwhile through

these e4orts is to reward

incompetence and ine4iciency.

(roductivity 5 the better the

/uality of a persons contributed

product, the more he or she

should receive. 2his ignores

peoples needs. It is di4icult to

place any objective measure on

the value of a persons product,

especially in $elds such as thesciences, the arts,

entertainment, athletics,

education, theology, and health

care.

Supply and "emand5 2he

value of a persons product

should be determined by the

mar#et forces of supply anddemand. >nfortunately this

method of measuring the value

of a persons product still

ignores peoples needs.

© 2001!y 'arl (# 'napp 1age !E of %0 0)12*2001


19/25


Justice based on !eeds and

"bilities: #ocialism

irst proposed by Louis 3lanc

(!ED+!F%* “rom eachaccording to his ability, to each

according to his needs.” 2he

socialist principal5 wor#

burdens should be distributed

according to peoples abilities,

and bene$ts should be

distributed according to

peoples needs.

irst there would be no relation

between the amount of e4ort a

wor#er puts forth and the

amount of remuneration one

receives (because remuneration

would depend on need, not on

e4ort*. Human nature is

essentially self+interested and

competitive and so outside the

family people cannot be

motivated by the faternal

willingness to share and help

that is characteristic of families.

If the socialist principle were

enforced, it would obliterate

individual freedom. 2he

occupation each person enteredwould be determined by the

persons abilities and not by his

or her free choice.

Justice as Freedom:

$ibertarianism

rom each according to what he

chooses to do, to eachaccording to what he ma#es for

himself (perhaps with the

contracted aid of others* and

what others choose to do for

him and choose to give him of

what theyve been given

previously (under this maxim*

and havent yet expended or

transferred. :bviously, this

means it would be wrong to tax

one person to provide welfare

bene$ts for someone elses

needs. 2his would generate

unjust treatment of the

disadvantaged.

Justice as Fairness: Rawls

2he distribution of bene$ts and

burdens in a society is just if

and only if5

© 2001!y 'arl (# 'napp 1age !F of %0 0)12*2001


20/25


A ?ach person has an e/ualright to the most extensivebasic liberties compatiblewith similar liberties forall, and

3 ocial and economicine/ualities are arrangedso that they are both5! 2o the greatest

bene$t of the leastadvantaged persons

% Attached to o4icesand positions open toall under conditionsof fair e/uality of

opportunity

1rinciple A is supposed to ta#e

priority over 1rinciple 3 should

the two of them ever come into

con=ict, and within 1rinciple 3,

1art % is supposed to ta#e

priority over 1art !.

1rinciple A is called the

principle of equal liberty 5

each citi7ens liberties must be

protected from invasion by

others and must be e/ual to

those of others. 2hese basic

liberties include the right to

vote, freedom of speech and

conscience and other civil

liberties, freedom to hold

personal property, and freedom

from arbitrary arrest.

1art ! of 1rinciple 3 is called

the di%erence principle. It

assumes that a productive

society will incorporate

ine/ualities, but it then assertsthat steps must be ta#en to

improve the position of the most

needy members of society,

unless such improvements

would so burden society that

they ma#e everyone, including

the needy, worse o4 than

before.

1art % of 1rinciple 3 is called

the principle of fair equality

of opportunity5 everyone should

be given an e/ual opportunity to

/ualify for the more privileged

positions in societys

institutions.

Retributi%e Justice

#etributive justice concerns

the justice of blaming or

punishing persons for doing

wrong. "ore relevant to our

purposes is the /uestion of the

conditions under which it is just

to punish a person for doingwrong. "ajor conditions under

which a person could not be

held responsible include

ignorance and inability . A

second #ind of condition of just

© 2001!y 'arl (# 'napp 1age % of %0 0)12*2001


21/25


punishments is certitude that

the person being punished

actually did the wrong. A third

#ind of condition of just

punishments is that they mustbe consistent and

proportioned to the wrong.

Compensatory Justice

9ompensatory justice concerns

the justice of restoring to a

person what the person lost

when he or she was wronged bysomeone else. 2raditional

moralists have argued that a

person has a moral obligation to

compensate an injured party

only if three conditions are

present5

! 2he action that in=icted the

injury was wrong ornegligent.

% 2he persons action was thereal cause of the injury.

& 2he person in=icted theinjury voluntarily.

2he most controversial forms of

compensation undoubtedly are

the preferential treatment

programs that attempt to

remedy past injustices against

groups.

Partiality and Care

2his view - that we have an

obligation to exercise special

care toward those particular

persons with whom we have

valuable close relationships,particularly relations of

dependency - is a #ey concept

in an ethic of care. 2hus, an

ethic of care emphasi7es two

moral demands5

• 'e each exist in a web of relationships and should

preserve and nurture thoseconcrete and valuablerelationships we have withspeci$c persons.

• 'e each should exercisespecial care for those withwhom we are concretelyrelated by attending to theirparticular needs, values,desires, and concrete well+

being as seen from their ownpersonal perspective, and byresponding positively tothese needs, values, desires,and concrete well+being,particularly of those who are

vulnerable and dependant onour care.

A communitarian ethic is anethic that sees concrete

communities and communal

relationships as having a

fundamental value that should

be preserved and maintained.

© 2001!y 'arl (# 'napp 1age %! of %0 0)12*2001


22/25


econd, it is important to

recogni7e that the demands of

caring are sometimes in con=ict

with the demands of justice. It

has been claimed that an ethicof care can degenerate into

unjust favoritism. Its demands

can lead to burnout due to the

sacri$ce of their own needs and

desires to care for the well+

being of others.

2.5 Integrating Utility, Rights,

Justice and Caring

>tilitarian standards must be

used when we do not have the

resources to attain everyones

objectives, so we are forced to

consider the net social bene$ts

and social costs conse/uent on

the actions by which we can

attain these objectives.

"oral reasoning of this type

forces consideration of whether

the behavior respects the basic

rights of the individuals

involved and whether the

behavior is consistent with

ones agreements and special

duties.

2hird, our moral judgments are

also in part based on standards

of justice that indicate how

bene$ts and burdens should be

distributed among the members

of a group.

ourth, our moral judgments

are also based on standards ofcaring that indicate the #ind of

care that is owed to those with

whom we have special concrete

relationships.

&his suggests that moral

reasoning should incorporate

all four 'inds of moral

considerations( althoughonly one or the other may

turn out to be rele%ant or

decisi%e in a particular

situation) *ne simple

strategy for ensuring that all

four 'inds of considerations

are incorporated into one+s

moral reasoning is to inquire

systematically into the

utility( rights( ,ustice and

caring in%ol%ed in a gi%en

moral ,udgment) "s' a series

of questions about an action

that one is considering:

- .oes the action( as far as

possible( ma/imi0e socialbene1ts and minimi0esocial in,uries2

3 4s the action consistent with the moral rights of those whom it will a5ect2

© 2001!y 'arl (# 'napp 1age %% of %0 0)12*2001


23/25


6 7ill the action lead to a ,ust distribution of bene1ts and burdens2

8 .oes the action e/hibitappropriate care for the

well9being of those whoare closely related to or dependent on oneself2

oral

#tandards

Factual

4nformati

on

oral

Judgment

"aximi7e

socialutility


24/25


dispositions we call the moral

virtues, and to exercise and

exhibit them in the many

situations that human life sets

before us.

An action is morally right if in

carrying out the action the

agent exercises, exhibits, or

develops a morally virtuous

character, and it is morally

wrong to the extent that by

carrying out the action the

agent exercises, exhibits, or

develops a morally vicious

character.

;irtues and Principles

Hence, there is no con=ict

between theories of ethics that

are based on principles and

theories of ethics based on virtues. An ethic of virtue is not

a $fth #ind of moral principle

that should ta#e its place

alongside the principles of

utilitarianism, rights, justice

and caring. Instead, an ethics of

virtue $lls out and adds to these

four by loo#ing not at theactions people are re/uired to

perform, but at the character

they are re/uired to have.

2.7 Morality in International

Contexts

ome have claimed that, when

operating in less developed

countries, multinationals frommore developed home countries

should always follow those

practices prevalent in the more

developed country, which set

higher or more stringent

standards. 3ut this claim

ignores that introducing

practices that have evolved in ahighly developed country into

one that is less developed may

produce more harm than good.

ome have gone to the opposite

extreme and argued that

multinationals should always

follow local practices, whatever

they may be, or that they shoulddo whatever the local

government wants, because it is

the representative of the

people. 3ut it is sometimes

unethical to go along with local

practices or government

re/uirements as it sometimes is

to oppose them.

2he foregoing discussion

suggests that the following

/uestions should be as#ed about

any corporate action or policy

under consideration by a

© 2001!y 'arl (# 'napp 1age % of %0 0)12*2001


25/25


company operating in a foreign

country5

! 'hat does the corporate policy oraction really mean in the context

of the local culture) 'hen viewedin terms of its local culturalmeaning, is the policy or actionethically acceptable, or does it

violate the ethical standards of utilitarianism, rights, justice, andcaring to such an extent that itshould not be underta#en) romthe perspective of virtue, does theaction or policy encourage theexercise or the development of morally good character)

% 2a#ing into account the nationslevel of technological, social andeconomic development and whatits government is doing to promotethis development, does thecorporate policy or action produceconse/uences that are ethicallyacceptable from the point of viewof utilitarianism, rights, justice andcaring, or from the point of view of moral character) 9an the morestringent legal re/uirements or

practices common in moredeveloped nations be implementedwithout damage to the hostcountry and its development, andin context would suchimplementation be more consistentwith the ethical standards of utilitarianism, rights, justice, andcaring) 'ould such

implementation encourage theexercise or the development of morally good character)

& If the corporate action or policy isallowed or re/uired by the laws orthe decrees of the local

government, does this governmenttruly represent the will of all itspeople) Joes the corporate actionor policy nevertheless violate theprinciples of utilitarianism, rights,

justice or caring, or is itcondemnable from the perspectiveof moral character) If so, and if theaction or policy is legally re/uiredto do business in the host country,then is the ethical violationsigni$cant enough to re/uire

withdrawal from that country) If the corporate action or policy

involves a local common practicethat is morally /uestionable byhome country standards (such assexual discrimination or bribery of government personnel*, is itpossible to conduct business in thehost country without engaging inthe practice) If not, then does thepractice violate the principles of utilitarianism, rights, justice, andcaring to a degree signi$cantenough to re/uire withdrawal fromthat country) Is the practice sopernicious from the perspective of moral character as to re/uirewithdrawal from the country)

35948726-business-ethics-concepts.docx

Documents